Building a multinational: the background of AED
Over the last thirty years, AED Group has become a key player in the audiovisual industry. With the help of external financial partners, the company now wants to transform into a fully-fledged multinational.
The story of Glen Roggeman, CEO of AED Group, is captivating stuff. Glen Roggeman started out at a very young age renting audiovisual equipment to local DJs. That was back in 1985. Today, his company has 300 employees and, every year, AED supplies audiovisual equipment for 60,000 events worldwide. From corporate events and large general meetings to Rock Werchter and Tomorrowland, from the Eurovision Song Contest to the opening ceremony of the Rio Olympics. AED supplies sound equipment, cameras, lighting and huge screens. "We are the banker of the television industry. We gauge the needs of each client and look for the best way of meeting them,” explains Glen Roggeman.
Financing to support its growth
AED has warehouses and operational sites in Belgium, France, Germany, the Netherlands and the UK. "The company has already successfully scaled several stages in its growth. And each phase brings new challenges in areas such as property management, operational structure and internal organisation. The needs and financing solutions are also different each time,” continues Glen Roggeman. He still remembers his early days, when he had to inject most of his own assets into his business and when the bank demanded significant guarantees for any loan.
As AED grew and recruited new employees, Glen Roggeman also began to make use of overdrafts and leasing arrangements to finance the company’s daily operations. Bullet and revolving loans also came into the picture. "A banker has a knack for coming up with financing opportunities," he smiles. "And each time, it’s an opportunity to subject your company to an external audit. Because a banker is also a partner that helps you become more professional in your approach. If he refuses a financing solution or makes a negative comment, he has his reasons. They shouldn’t be ignored. Your company will emerge stronger if you put your banker’s advice into practice."
Arrival of external capital
AED first made use of venture capital or private equity a decade ago when the PE Group acquired a 10 million euro stake in the capital. Other players soon followed, including ING. With the arrival of external risk capital, AED further gained in maturity. "The arrival of increasingly important players injecting more and more funds forced us to make our operation even more professional," says Glen Roggeman. "You have to be well prepared. When AED celebrated its tenth anniversary, I was already looking for external capital. But I very quickly realised that the company wasn’t ready. Private equity investors don’t simply wait around for periodic financial reports, they also want a fully developed internal management structure. And in 1995, my company was still a one-man-show. It was only ten years later that we were really ready to bring on board external venture capital."
Meanwhile, AED is banking on a new private equity transaction of over 100 million euros. "With this extra fuel, we will be able to drive a buy and build strategy over the coming years. There are several companies in the sector who copy us and the time has come to buy a few. We can then turn AED into a large multinational company,” concludes Glen Roggeman.
The mix of financing channels is a plus
"For a large company, it isn’t necessarily easy to finance heavy investments or acquisitions. Though they have many more opportunities, the complexity of financing transactions also increases with the size of a company,” explains the Febelfin spokesperson Isabelle Marchand. Large companies can turn to the market, but a bond issue or a stock market flotation are very complex operations. They come with certain obligations, conditions and specific costs.
Traditional financing also plays an important role in large companies. "There is an ideal form of funding for each project. It is probably preferable to finance an investment in a machine fleet with a long-term bank loan via the bank or a leasing formula, while for the financing of current assets, it is often cheaper to take out a credit line. There are also specific loans for companies that export a lot. There is a different solution for each challenge,” says Isabelle Marchand.
The mix of financing channels is an important asset for large companies. "It is always safer to rely on multiple financing channels. Companies that make too much use of short-term debts could experience long-term difficulties,” concludes Isabelle Marchand. "Companies are constantly seeking the right balance between equity and debt. This implies an in-depth analysis of its financing portfolio that is continuously optimised."